Waiting to buy: Tax-free sales no holiday for small business

Thursday

Jul 26, 2007 at 12:01 AMJul 26, 2007 at 3:46 PM

Your local small businesses are being forced out by the “Tax Free Weekend.”

By Chris Sands

Once again, the state Legislature is considering waiving the sales tax for a single weekend in August. It hurts the state, it is murder on small businesses, and eventually it will cost the average resident money and jobs.

The Retail Association of Massachusetts (i.e. the big stores) is telling the public that this policy is good for business. The Legislature knows that that’s not true, but the group has created a consumer frenzy among the voters that is hard for them to ignore. The reality is that it adds nothing to the overall economy, it is expensive and difficult to administer, and impossible for a small business to cope with. Here’s the truth.

The reality is that the “tax holiday” that the Legislature has pursued for the last four years is nothing more than a political game, and one that has real potential to become both a revenue and employment issue.

Even though everybody knows that the state is in a deficit, no member of the House or Senate with hopes of getting re-elected can go against this measure lightly. Their constituents, of course, love this “tax weekend” because they can plan their purchases to save 5 percent. Consumers see it only as a benefit, and that makes it very hard for a legislator to vote against it. Therein lies the problem.

The tax holiday has become an expectation in the marketplace, and the Legislature has trapped itself into doing this in spite of the deficit. So, we as a state are deliberately deepening a serious budget crisis.

In addition to the burden that this foolishness creates on the state budget, it is not the blessing to all businesses that it is being touted as. As a manager of a retail showroom, I have seen our business consistently hurt by this policy.

My store sells high-end bathroom fixtures and faucets. Customers don’t buy these items on a whim; they plan these purchases months in advance. So, every year to date, our sales have virtually died as soon as the legislature starts talking about doing this.

Consumers simply refuse to buy when they think that they can wait and save 5 percent in a few weeks. So, our sales volume plummets. Then “tax weekend” comes, and I have to pay my staff overtime to be here all weekend to try to recoup some of that loss.

While the receipts for those “tax free” days are admittedly high, they simply cannot touch the losses caused by consumers holding off on making purchases for a month prior. It is impossible for a small staff to wait on two months worth of customers in two days.

As an added insult, sales in August and September are also always weaker than normal after one of these “tax weekends.” Small businesses, Massachusetts businesses, lose on both sides and gain nothing.

The reality is that my costs (and everyone else’s) of doing business are consistent. Taxes, rent, utilities, insurance and payroll are all regular costs. Therefore my floor traffic and sales need to be regular as well. When the Legislature creates a disruption in consumer spending patterns then they create an unnecessary hardship for businesses. Wal-Mart & Best Buy can ride out these “hiccups” in the marketplace and recoup it on impulse buys on the “tax weekend.” The small businessmen simply cannot cope with a disruption of that magnitude.

I simply do not understand the rationale behind these “tax holidays.” The state throws away revenue, small businesses suffer, and the only people that benefit are some of the big stores that aren’t even based in Massachusetts. I, and other small businessmen, cannot survive these legislative whims indefinitely. We have to maintain a certain level of staffing based upon our projected volume.

The cold fact is that businesses without the deep pockets of a national chain cannot afford to have no business for two months with the exception of one frantic weekend. These “tax holidays” are simply an expensive burden, and they generate nothing.

Simply put, this issue has been hijacked by special interests, (i.e., the big-box stores, represented by the Retail Association of Massachusetts) and legislators more concerned with making political hay than making sound policy. Small companies that have only a few employees (I have two, plus myself) are simply getting killed. It is my fervent hope that this fiasco can be stopped before it becomes impossible to run a small business in Massachusetts.

Chris Sands is the showroom manager of The Bath and Kitchen Showroom in Weymouth. He lives in Brockton.

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